HomeMy WebLinkAboutRESO7034As shown on the above table, within the next five
year period the City could lose a total of 279
subsidized units if the three projects at risk
were converted to market rate housing. Purchase
or replacement costs of such units would be
substantial. Based on estimated land costs of
$32-35 per square foot and estimated construction
costs ot $75 per square foet, it would cost the
City a ':otal of $30+ million to replace such
un1ts. !'I.epJ.dct:!LlIt:!U\...L~ H ... ;" ..... ..:..:.::!.~t;.!.~ ~;;~i~~
given the shortage of available, suitable housing
sites. Based on current market rates for rental
properties of equivalent size and location and it
no othf!!l'" resources are available, it could cost
the City up to $20+ million to purchase such
units.
Resources available to assist in preserving the
affordability of such units include provisions of
recent fede.:-al <lnd state legislation, including
options for purchase and management by qualified
local non-profit housing agencies or tenant
organizations, and federal and local housing
funds.
New federal and state legislation has recently
been enacted in recognition of the seriousness and
magnitude of the potential loss of low-income
units through Jut the state and nation.
The Low Income Housing Preservation and Resident
Homeownership Act of 1990 (LIHPRHA) was er.acted in
December of 199-(T-to establish permanent -federal
legislation regulating the conversion of
properties with federally subsidized mortgages to
market rate housing. LIHPRHA establishes a
preser~ation program for eligible low-income
housing projects, and allocated funds for purchase
and rental subsidies to assure continuation of the
affordability of the units at risk. Palo Alto
Gardens and Arastradero Park Apartments meet the
definition of "eligible projects". The Sheridan
Apartments does not because it was not built under
the particular federal programs LIHPRHA addresses.
units at risk can be preserved by the owner
decidinq to retain ownership enjoying the
incentives provided by LIHPRHA, or through the
sale of the project to existing tenant~, who may
then sell wit.h no restricti.ons, or to a non-profit
housing agency who must maintain the units as
subsidized housing for the remaining life of the
units.
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7ederal funding sources in addition to those
established under LIHPRHA which can be pursued to
finance purchase of units at risk include
community Development Block Grant Land Bank funds,
and Moderate Rehabilitation/Acquisition funds.
The city receives approximately $550,000 annually
in CDBG funds, which is supplemented annu~lly by
program income funds from previous CDBG loans.
Eve~ year the City land banks a portion of these
f\!nds for acqul.sl.tlon/rehaDi.1..Ll;.d.\..LUU u~ ;.vw:.....:.u.:.;.;.~.:.
housing_ In 1991, $300,000 was added to the land
bank fund, bri.nging the total to 1.2 million.
These funds could potentially be used for purchase
of ~~it~ et risk_
Actions taken by the state to preserve units at
risk include two measures enacted in 1987. One
is included in the California Tax Conformity bill
and provides tax incentives for project owners to
sell the develop:nl~nt to iiOii.=profit eponsor~ who --
would maintain project affordability. The second
state provision (S8 1473, Chapter 1383) provides
for notice of conversion to tenants and the
public, and a public hearing.
state statutes enacted in 1990 (Chapters 1437 and
1438) establish requirements which expand upon
those established by SB 1473 and parallel those
established by LIHPHRA. Such provisions include a
requirement to offer first right of refusai of
sale to qualifying entities who will maintain the
units as affordable units, a requirement for
expanded public notice and an increase in the
notice requirement from six months to one year.
The City has no Redevelopment Agency ",'bich could
provide funds for purchase of subsidi2ed units at
risk. Although the city has no Housing Authority,
any funding available for aC4uisition of projects
at risk through the Santa Clara County Housing
Authority could be available for purchase of units
in Palo Alto. However, it is expected that other
areas of the County may be given priority over
Palo Al to. Local funds which could be used to
assist in purchase of units at risk would come
from the City's housing mitigation fund and
residential in-lieu housing fund.. In 1.991, the
City had a total of $3 million in these funds.
The amounts in these funds will vary from year to
year and allocations for purchase of units at risk
must compete with other low-income housing
priorities and requests for funding assistance.
Though not considered an eligible project under
LIHPRHA, the Sheridan Apartments are subject to
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